With the holiday season well behind us and the month of January stretching out in front my mind turns to the impending end of the filing season for tax year 20010/11 (the year ended 5 April 2011) on 31 January. This may mean very little to many people but, to those affected by the deadline, failure to comply can lead to a penalty, which can just add to the costs at this time of year.
Tax Returns are not required from everybody. You have to submit a return only if you fall into one of two categories.
Firstly, you have to send in a Tax Return if you are sent one by the taxman. This is likely to be the case if you are self-employed or if you have rental income or are a higher rate taxpayer with multiple sources of income.
Secondly, you should submit a Tax Return if you owe the taxman money. It is up to you to work that out for yourself and there are penalties (basically fines) which can be levied if you owe tax but don’t offer it up.
A third category of people might choose to submit a tax return voluntarily because the taxman owes them money and using this self assessment Tax Return system can often be the quickest way to get the repayment processed.
There are two normal deadlines for submitting a tax return. If you do it the traditional way by filling in the paper form and sending it to the tax office, then the deadline was 31 October and is, of course, now long past. The only remaining option is to use the online submission system where the deadline is 31 January. Although accountancy firms like Armstrong Watson are able to do this and, in any case, really have no choice but to file over the internet (and there are some advantages), I appreciate that not everyone uses an accountant and not everyone is happy with modern technology. Unfortunately, if this describes you and your return is still outstanding then the taxman is unlikely to be sympathetic.
If you miss the deadline there is an automatic penalty of £100.
For some the effective online system is even sooner than they think as first time users have to register with the government gateway before you can use the website for first time before they can submit the tax return and this can take up to a week.
Of course the other unpleasant feature of 31 January is that you also have to pay any tax that is due. Depending on your circumstances you might also have to pay some of the following year’s bill on account. All this expense tends to arrive at about the same time as the credit card bill for your Christmas shopping so it can be a pretty expensive time.
Make a resolution for next year now and get the Tax Return in early so that you can budget in good time and save the extra cost.